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6/08/2010 @ 10:26AM12,378 views

The Parents Of CSR: Nike And Kathie Lee Gifford

Just a few decades ago, “CSR” meant customer service representative. My, how things have changed!

Corporate social responsibility is now a profession. Business schools feature CSR curricula while the popularity of sustainability professional organizations such as Net Impact have exploded. Even CSR-focused think-tanks and trade media have proliferated: The Corporate Responsibility Officers Association joined the ranks of Ethical Corporation which followed Business for Social Responsibility that stood on the shoulders of the Center for Corporate Community Relations (now the Boston College Center on Corporate Citizenship).

It wasn’t always so. CSR, as we now know it, sprung out of the apparel industry’s use of sweatshop and child labor. There are two pivotal events that changed the expectations of business to evaluate the social and environmental impact of its supply chain: the exposure of Nike’s business model and Kathie Lee Gifford’s clothing line.

NIKE TRIPS OVER ITSELF

The 1990’s was not a good decade for Nike’s reputation. Especially mid-decade, one might imagine that the Greek Goddess of Victory would have wanted to send down Zeus’ henchmen to snatch her name back from the Oregon-based sportswear company.

Through the 1970s, when it was still known as Blue Ribbon Sports, the company focused its business model on finding low-cost producers overseas in an effort to undercut competitors and gain entry into the marketplace.

According to an academic paper by Richard Locke at the MIT Industrial Performance Center, criticism of Nike’s subcontractors subverting minimum wage laws in Indonesia appeared in 1994 in Rolling Stone, The New York Times, Foreign Affairs and The New Republic. The company tried to ignore the issue, claiming it could not be held responsible for the practices of suppliers. But then in June 1996, Life magazine published pictures of a child in Pakistan assembling Nike soccer balls. This was a critical event in reshaping the company’s view of its responsibility for the supply chain, according to Locke.

After a 1997 company-sponsored Ernst & Young audit of a Vietnamese factory was obtained and leaked by the Transnational Resource and Action Center (now known as CorpWatch), Nike’s chairman and CEO Phil Knight issued a mea culpa.

“The Nike product has become synonymous with slave wages, forced overtime, and arbitrary abuse,” Knight said at a 1998 press conference at the National Press Club, as quoted in a New York Times article. It was at this conference that the company announced that it would implement a more rigorous social auditing regime and extend US operating rules and processes to its overseas contractors.

“We believe that these are practices which the conscientious, good companies will follow in the 21st century,” Knight said according to the Times. “These moves do more than just set industry standards. They reflect who we are as a company.”

This was one of the watershed moments in CSR. For once, a major public company with a household-name brand took responsibility for its supply chain. No longer could companies get away with simply shrugging off the practices of its suppliers as “out of their control.” As one of the most visible brands in the marketplace, Nike joined a chorus of other companies, including Levi Strauss, that adopted this expanded view of its responsibilities to producers and consumers. Nike is now considered a top corporate citizen, according to Corporate ResponsibilityMagazine.

KATHIE LEE PUSHES CSR TO GO “POP”

In 1996, another child labor scandal was brewing. The National Labor Committee, led by Charlie Kernaghan, announced that a Kathie Lee Gifford clothing line sold at Wal-Mart used child and sweatshop labor. Lee’s first reaction was to challenge the Labor Committee to a public relations duel. In a tearful and angry reaction on her show Live with Regis and Kathie Lee, she claimed that the accusations were false.

Once Kernaghan paraded factory worker Wendy Diaz around Capitol Hill to testify about her experience working in the factory, Kathie Lee and her husband Frank Gifford retraced their steps and tried to make amends with the workers. They brought paychecks to the Hill in an attempt to pay the workers a fair wage and pledged to eliminate child labor through activism in Washington.

It was because of Kathie Lee’s experience that the issue of the working conditions of subcontractors entered into popular culture. For once, sweatshop working conditions left the confines of the “activist” and “corporate” public relations spin masters to join the conversation at the morning breakfast table.

AND SO IT BEGAN

These two cases cemented an expanded expectation of business to accept responsibility for the oversight of the social and environmental impacts of its supply chain. In the aftermath, companies in industries other than apparel became concerned about tarnished reputations, potential regulations, and shareholder actions and enacted CSR programs as preventative measures.

The cottage industry of CSR developed into a maturing profession. Whether or not this change in the marketplace will be permanent remains to be seen.

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